TracFone`s Complaint states that TracFone is the largest provider of

Case 1:10-cv-24386-JEM Document 80 Entered on FLSD Docket 02/06/2012 Page 1 of 28
IN T H E U NITED STA TES DISTR ICT C O U R T
FOR THE SO UTHERN DISTRICT OF FLORIDA
CA SE N O .1:10-CV -24386-JEM
TM CFONE W IRELESS,m C.,
aDelawareCorporation,
Plaintiff,
PAK CHINA GROUP CO.LTD.,aforeign
cop oration;NEW PAK CHINA TM DE
INTERNATIONAL CO.,a foreign corporation;
etal.,
Defendants.
/
FIN AL JU D G M EN T A N D PERM A N EN T IN JU N CT IO N
A G A IN ST D EFEN D AN T S PA K C H INA G R O UP C O .LTD .
AN D NEW PA K C H IN A TM D E IN TE RN A TIO NA L C O .
THIS M ATTER is before the Court upon Plaintiff TracFone W ireless, Inc.'s
(çd-l-racFone'')M otion forDefaultJudgmentagainstPak China Group Co.Ltd.(ttpak China'),
and New Pak China Trade InternationalCo.(lçNew Pak China'') (collectively 'tDefendants'')
(D.E.No.794.Plaintiffscomplaintassertsclaimsforfederaltrademarkinfringement,15U.S.C.
j 1114;federalunfaircompetition,15U.S.C.j1125;breachofcontract;contributorytrademark
infringement; copyright infringement, 17 U.S.C. j 101 et seq.; violations of the Digital
Millennium CopyrightAct((1DMCA''),17 U.S.C.j 1201 etseq.;tortiousinterference with a
contractual right'
, conspiracy to induce breach of contract; civil conspiracy; and unjust
emichment.
1.
PlaintiffTracFone W ireless,Inc.'sBusiness
TracFone'sComplaintstatesthatTracFone isthe largestproviderofprepaid wirellss
E
telephone service in the United States, and m arkets its service tmder the TracFone,Netlo,
SafeLink and StraightTalk brands(hereinaher referred to as Cil-racFone Prepaid Phones''or
çsphones''). (DE 6 at! 334. TracFone'sComplaintfurtherstates thatTracFbne's customers
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prepay forwirelessservice by purchasing TracFone airtime cards and wirelessPhones specially
manufactured for TracFone. Id
TracFone's Complaint states that TracFone subsidizes its
customers'acquisition ofits Phones by selling the Phones to retailers for m uch less than the
E
PhonescostTracFonefrom themanufacturers. 1d.at!35. TracFone statesthatitrecoupsthis
subsidy by selling prepaid airtimeto customerswho buy subsidized Phones. ld TracFone states
thatittakes severalstepsto protectitsinvestmentin the subsidiztd Phones,which are designed
tomakesurethatthePhonescanonlybeusedonTracFone'swirelessnetwork.Id at!!30-31.
TracFonestatesin connection with advertising and selling itsPhones,TracFonehasused,
and continues to use,severaltrademarks (the lsMarks'') in commerce including the marks
TracFone,NETIO,SafeLink and Straight Talk, which it states constitute the lawful,valued,
subsisting and exclusive property of TracFone and that TracFone and its authorized,affiliated
agentsareperm itted tousetheM arks. 1d.at!!38-39.1
TracFone statesthatitsM arksare wellknown and established to custom ersand the trade
as symbols identifying and distinguishing TracFone's products and services and signify
distinctive products and services of high quality and provide actual notice that TracFone's
Phones are intended for use solely within TracFone's network. 1d. TracFone states thatthe
1 In Particular, TracFone ownsand hasalso used thefollowing trademarks:(1)Incontestable
United StatesTradem ark Registration No.2,114,692 forTracFone,based on a firstuse date
ofJune30,1996;(2)UnitedStatesTrademarkRegistrationNos.3,224,929and 3,222,623for
TracFone Nationwide Prepaid W irelessand Design based on a firstuse datesofDecember
31,2005;(3)United StatesTrademark Registration No.3,118,250 forNETIO,based on a
firstusedate ofM arch 1,2005;(4)United StatesTrademark Registration Nos.3,255,7$4,
3,253,506,and 3,251,389 forN ETIO Pay As You Go M ade Sim ple and Design,based on
first use dates of December 31, 2005;(5) United States Trademark Registration No.
3630,321 for SafeLirlk W irelessand Design,based on a firstuse date of September t2,
2008;and (6)StraightTalk and StraightTalk and Design,based on afirstusedateofMay
29,2009.Id at!37.
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M arks have becom e an intrinsic and essential partof the valuable goodwill and property of
TracFone. Id
TracFone statesthatithas learned thatalthough large quantitiesofitsTraeFone Prepaid
Phones are being purchased atretailers throughoutthe United States,a signifk antnumber of
theseTracFonePrepaidPhonesarenotbeingactivated foruseontheTracFonenetwork.f#.at!
49.Accordingto TracFone,instead,entitiesand individualsarepurchasingand selling TracFone
Prepaid Phones in bulk quantitiesforuse outside ofthe TracFone Prepaid W irelessService and
CoverageArea. Id at! 50. TracFonefurtherstatesthatd'the Phonesare removed from their
originalpackaging, shipped overseas,and unlocked orreflashed. Id 2 TracFone claim sthataja
resultofthese actions,TracFone losesboth:(1)the subsidy thatitprovided when selling the
Phonetotheretailer;and (2)therevenuefrom sellingairtimeonthathandset.Id at!52.
II.
Defendants'Business
According to TracFone,Defendants are also engaged in unlawful business practices
involving the unauthorized and unlawfulbulk purchase and resale ofTracFone Prepaid Phones,
unauthorized and unlawful computer unlocking or reflashing of TracFone Prepaid Phones,
alteration ofTracFone'scopyrighted and proprietary software installed in the Phones,trafticking
ofthe Phones forprofit,and for otherviolationsofFederalstatutory 1aw (the liBulk Resale
Scheme'). See (DE 6 at! 11.Asalleged in theAmended Complaint,documentsin TracFonèi's
possession dem onstrate that Defendants traftk ked thousands of TracFone Prepaid Phones in
2 The process ofl'unlocking''orStreflashing''TracFone Prepaid Phones ûsinvolvescircum venting
the electronic protections installed in the handset, and then erasing, removing and/or
disabling the TracFone Prepaid Software.'' Id.at51. Once a TracFone Prepaid Phone has
been unlocked or retlashed,it is no longer operable within TracFone's prepaid wireless
virtualnetwork,and is operable on other cellularnetworks. Id TracFone no longerhas a
revenue source to recoup the invested subsidy on thatphone. 1d.at52;see also TracFbne
Wireless,lnc.v.Anadisk LLC,685F.Supp.2d 1304,1308(S.D.Fla.Feb.18,2010).
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furtherance ofthe Bulk Resale Scheme. See (DE 6). Defendants'participation in the Bulk
Resale Schemehascaused damage and substantialand irreparableharm to TracFone.Seeid.
111.
The PresentLitiaation
As a result of Defendants' business activities, Tracfone asserted daim s against
DefendantsforFederalTrademark Infringementinviolation of15U.S.C.j1114;FederalUnfair
Competition in violation of 15 U.S.C.j 1125)Breach ofContract;Contributory Trademark
lnfringement;Copyright Infringem entof Software in violation ofTitle 17 ofthe United States
Code; Circum vention of Copyrighted Sohware Protection System and Traftkking
Circum vention Technology in violation ofthe D M CA ;Tortious lnterference w ith a Contractual
right in Violation of Florida Com mon Law ;Conspiracy to Induce Breach of Contract; Civil
ConspiracyinViolation ofFloridaCommon Law;andUnjustEmichmentinViolation ofFlorida
Comm on Law . The Courtfindsthatallofthe allegations in the complaint are wellpled,and
they are deem ed adm itted by virtue ofDefendants'default.See EagleHosp.Physicians,LLC v.
SRG Consulting,Inc.,561F.3d 1298,1307(11th Cir.2009)(quotingNishimatsu Constr.Co.v.
HoustonNat'lBank,515F.2d 1200,1206(5th Cir.1975)).TracFonehasthereforesucceeded in
proving itsclaimsand Defendantsarehereby permanently enjoined and liableto TracFonefor
thedam agessetforth herein.
JU R ISDIC TIO N AN D VEN U E
ThisCourthassubjectmatterjurisdiction overthismatterpursuantto 28U.S.C.j 1331
,
;
1338,and 17U.S.C.j 1203 becauseTracFone'sclaimsariseunderfederallaw,specifically,fhe
United States Copyright Act,Title 17 of the U nited States Code,and U nited States Tradem ark
Act,Title15oftheUnitedStatesCode.ThisCourthassupplementaljurisdiction pursuantto28
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U.S.C.j 1367overTracFone'sstatelaw claimsbecausethoseclaimsaresorelatedtothefederal
claim sthatthey form partofthesame caseorcontroversy.
This Courthas personaljurisdiction over Defendants because Defendants have had
continuous and substantialbusiness connections to the State of Florida,including conducting
business with companies located in Florida. Defendantsare further subjectto the personal
jmisdiction of this Court pursuant to: Fla. Stat.j 48.193(1)(a) because Defendants have
conducted, engaged in and carried out business ventures within the State of Florida; j
48.193(1)(b)becauseDefendantshavecommittedtortiousactswithin theStateofFlorida;and( j
48.193(1)(g)by failing to perform actsrequired by a contractto be perfonned in the State of
Florida.M oreover,Defendantsarealso subjecttothisCourt'spersonaljurisdictionpursuanttoj
48.193(2) because Defendantshave engaged in substantialand not isolated business activity
within theStateofFlorida.
Venue isproperin thisCourtpursuantto 28U.S.C.j 1391(
i
a)and (b),and 28U.S.C.j
1400,because a substantialpartof the events or om issions giving rise to the claim occurred in
this D istrict the impactofDefendants, m isconductoccurred in thisDistrict,and Defendantsalre
,
subjecttopersonaljurisdictioninthisDistrict.
TracFone's s-e
-rviceofProcesson Defendan-ts
-.
TracFone proffers thatithaseffectuated service on Defendantsptlrsuantto Fed.R.Civ.
E
P.4(9(2)(c)(ii),which requiresthatthemailingbeaddressed and dispatched bytheClerk ofthe
Court. Specifically, Fed. R. Civ.P.4(9(2)(c)(ii) provides, in pertinent part, that if not
prohibited,ûdan individual ...may be served ata place notwithin anyjudicialdistrictof$he
i
United States:...by (ii) using any form ofmailthatthe clerk addresses and send to the
individualandthatrequiresasignedreceipt.''Fed.R.Civ.P.4(9(2)(c)(ii),lsThus,in additionto
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service through the CentralAuthority ofeach country,(Article 10(a) gofthe Hague Service
Convention)providesthat,iftheStateofdestination doesnotobject,theHagueConvention does
not change the freedom to send judicialdocuments,by postalchannels,directly to persons
abroad.''' TracFone Wireless,Inc.v.Bequator Corp.,Ltd.,717 F.Supp.2d 1307,1309 (S.D.
Fla.2010)(citingCurcurutov.Cheshire,864F.Supp.1410,1411(S.D.Ga.1994)).
The Courtfurther notes thatthis district,along with several district courts within the
Eleventh Circuitand many otherfederalcircuitcourts and districtcourts,have held thatArticle
ç(10(a)permitsservicebymailunlessthecountryhasobjectedtothismethod.''Bequator,717F.
Supp.2d at1309 (citing Curcuruto v.Cheshire,864 F.Supp.at1411);Conax Fla.Corp.v.
Astrium Ltd.,499 F.Supp.2d 1287,1293 (M .D.Fla.2007)(authorizing service by mailupon
findingthatCtArticle10(a)isapplicabletoserviceofprocess.');festradev.UnitedStates,945F.
Supp.2d 1557 (S.D.Fla.1996)(holding thatservice of1RS petition by mailsatisfied Hague
ServiceConvention);seealsoBrockmeyerv.May,383 F.3d 798,802 (9th Cir.2004)(holding
that Article 10(a) does include service of process by mail,reasoning that lisend judic;ial
documents''encompasses liservice of process,''and that such m ethod is çdconsistent with the
purposeofthe Convention to facilitate internationalserviceofjudicialdocuments.');Research
(
Sys.Corp.v.IPSOSPublicite,276F.3d914,926 (7th Cir.2002),cert.denied,537U.S.878,123
S.Ct.78 (2002);Ackermann v.fevine,788 F.2d 830,838-40 (2d Cir.1986);Robins v.Max
Mara,US.A.,lnc.,923 F.Supp.460,469 (S.D.N.Y.1996);Borschow Hosp.andMed Suppliez
Inc.v.Burdick-siemensCorp.,l43F.R.D.472 (D.P.R.1992);Patty v.ToyotaM otorCorp.,777
F Supp.956 (N.D.Ga.1991);ChryslerCorp.v.Gen.M otorsCorp.,589F.Supp.1182 (D.D'
7C.
*
1984))Mainstream M edia,EC v.Riven,No.C 08-3623 PJH,2009 W L 2157641,at*3 (N.D.
Cal.July 17,2009)(noting thatpreviously the dlcourtgranted P laintiffs)motionforaltem ative
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service on (Defendantjpm suantto FederalRule ofCivilProcedure 44943),directing thatthe
priordelivery ofservicedocumentsby (Plaintiftlto (Defendantjviae-mail,internationalmail,
and internationalcourier (FederalExpress)was effective service ofprocess.');Ehrenfeld v.
Salim a BinMahfouz,2005W L 696769,at*3 (S.D.N.Y.Mar.23,2005)(approvingserviceby
certifiedmailorFedEx);Broadfootv.Diaz(In re1nt1TelemediaAssoc.j,245B.R.713,719-20
tBallkr.N.D.Ga.2000)(authorizingserviceviafacsimile,ordinarymail,andemaill.3
TracFone has previously submitted evidence to this Court indicating Hong Kong's
position with respectto particular articles of the Hague Service Convention,with respectto
Article 10(a),HongKonghasçtno opposition.'' (DE 9-4) TheCourtthusfindsthatHongKong
does notobjecttojudicialdocumentsbeing sentby postalchannelspursuantto Article 10(a).
Seealso Bequator,717 F.Supp.2d at 1309. The CourtthusfindsthatTracFone'sservice ofthe
Summ ons and Am ended Complaint on Defendants sentvia internationalexpress m ailand via
FedEx directedto theirPresident,GeneralM anager,orotherexecutive officerattheirrespective
headquarters,wassufficient,pursuanttoFed.R.Civ.P.4(9(2)(c)(ii).
The Courtfurther orders that,pursuant to Fed.R.Civ.P.12(a)(1)(A),Defendants'
answ ers to TracFone'sA m ended Com plaintw ere required to have been tiled w ithin twenty-one
days afterreceiptofthe copy ofthe Summ onsand Am ended Complaint,to be sentvia United
States postal service international express mail and via FedEx and directed to Defendants'
3 # / see N uovo P ignone, SpA v.Storman Asia M/V,310 F.3d 374,384 (5th Cir.2002);
Bankstonv.ToyotaM otorCorp.,889F.2d 172,174 (8th Cir.1989). However,theCourtnotes
that Plaintiff has subm itted a letter from the United States Departm ent of State to the
AdministrativeOffice oftheUnited StatesCourts,dated March 14,1990 in resgonseto the
Bankston decision, w herein the U nited States D epartm ent of State stated its bellef Stthat the
decision of the Courtof Appeals in Bankston is incorrect to the extent that it suggests thatthe
Hague Convention doesnotperm itasam ethod ofserviceofprocessthe sending ofa copy ofa
sum monsand complaintby registered m ailto a defendantin a foreign country.'' See M arch 14,
1990 letterfrom Alan J.Kreczko,Deputy LegalAdvisor,United StatesDepartm entofState,to
Adm inistrativeOfficeoftheUnited StatesCourtsattached to TracFone'sM otion asExhibitD .
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President,GeneralM anager,orotherexecutive officeratDefendants'businesslocationsin Hong
Kong. See TracFone,717 F.Supp.2d at1310;SCM Corp.v.TrajesInternacionalesdeCosta
Rica,S.A.,No.98-6245,1999 W L 718650,at*1-3 (E.D.Pa.,Aug.30,1999)(noting thatthe
timeperiodsforresponding to acomplaintset-forth in Fed.R.Civ.P.12(a)(1)(A)apply to a
defendantserved abroad). Defendantswererequiredto filetheiranswerson orbeforeJune30,
2011.SeeW eissAff at!!8-9;(D.E.48;D.E.491.AsDefendantshavefailedtoanswer,theyare
in default.
A (fdefendant,by hisdefault,admitstheplaintiffswell-pleaded allegationsoffact''asset
forth in theoperative com plaint.Eagle Hosp.Physicians,561F.3d at1307. ûsW ith regard to /he
m easureofdnmages,theallegationscontained in thecom plaintarenotconsidered admissionsby
virtueofthe default;(rlather,theCourtdeterminestheamountand characterofdamagesto be
awarded.'' Zambrana v.GeminisEnvios Corp.,N o.08-20546-C1V,2009 W L 1585995,at # 2
(S.D.Fla.June4,2009)(internalquotationsand citationsomitted).A ccordingly,TracFone can
establish the am ountof dam ages by subm itting sufticient evidence to supportthe requestfor
damages. I6l (internalquotations omitted). ln assessing dnmages withouta hearing, it;is
appropriatefortheCourtto utilizeçsmathematicalcalculations.''AdolphCoorsCo.v.Movemçnt
AgainstRacism andtheKlan,777F.2d 1538,1544(11thCir.1985).
D ISC U SSIO N
1.
TracFone'sTradem ark Related Claims(CountsOne.Two and Four)
Section 32(1) of the Lanham Act protects against the use in commerce of çiqny
reproduction,counterfeit,copy,orcolorable im itation ofa registered m ark in com w ction with the
sale,offering forsale,distribution,oradvertising of any goods orserviceson or in connection
21792657.1
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with which such use islikely to cause confusion,orto causem istake,orto deceive.'' 15 U .S.C.
j1114(1)(a).Section43(a)oftheLanham Actstatesthat:
Any person who,on orin connection with any goods orservices,
or any container for goods, uses in com merce any word,term ,
name,sym bol,ordevice,orany com bination thereof,orany false
designation of origin,false or m isleading description of fact,or
falseorm isleading representation offact,which-
(A)islikely to causeconfusion,ortocausemistake,orto deceive
as to the affliation,connection or association ofsuch person with
anotherperson,orasto the origin,sponsorship orapprovalofhis
orhergoods,services,orcomm ercialactivitiesby anotherperson,
Or,
(B) in commercial advertising or promotion, misrepresents the
nature,characteristics,qualities,orgeographic origin ofhis orher
or anotherperson's goods,services,orcom m ercialactivities,shall
be liable in acivilaction by any person who believesthathe orshe
isorislikely to bednmaged by such act.
15U.S.C.j1114(1)(a).
tél-l-lheCourtinterpretsthisSection (j43(a))ashaving created afederalcauseofaction
forinfringementofunregistered tradem ark ortrade dressand concludesthatsuch am ark ortrade
dress should receive essentially the same protection as those thatare registered.'' Fwt?Pesos
Inc.v.Taco Cabana,Inc.,505U.S.763,776,112 S.Ct.2753 (1992)(Stevens,J.,concurring).
Thus, in order to prevail on a claim of tradem ark infringement under Sections 32 and 43,
TracFonemustdemonstratethat(1)ithasavalid,protectablemark and (2)thatdefendants'use
ofthemark isGdlikely to causeconfusion,ortocausemistake,orto deceive.'' See 15U.S.C.j
1114(1)(a).
Contributory infringem entextendsto Clallthose who knowingly play a significantrole in
accompanying theunlawfulpurpose.''Stix Prods.,Inc.v.United Merchs.drM#s.,Inc.,295F.
Supp.479,500(S.D.N.Y.1968);seealsoEsteeLauder,Inc.v.Watsky 323F.Supp.1064,1067
(S.D.N.Y.1970). Silfa manufacturerordistributorintentionally inducesanotherto infringea
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trademark,orifitcontinuesto supply itsproductto onewhom itknowsorhasreason to know is
engaging in tradem ark infringement,them anufacturerordistributoris contributorily responsible
forany harm doneasaresultofthedeceit.''Inwood Labs.,Inc.v.IvesLabs.,Inc.,456 U.S.844,
854 (1982);seealsoRolex Watch USA,Inc.v.M eece,158F.3d 816,828(5thCir.1998).
A.
V alid and Protectable M ark
Pursuantto Section 7(b)oftheLanhnm Act,acertificateofregistration ofatrademark
issued by the United States Patentand Tradem ark Office isçsprima facie evidenceofthevalidity
oftheregistered mark and oftheregistration ofthe mark,ofthe owner'sownership ofthem ark,
and ofthe owner's exclusive rightto use the registered m ark in comm erce on orin connection
with the goodsorservicesspecified in the certificate.'' 15 U.S.C.j 1057(b). M oreover,the
Eleventh Circuitstrongly presumesregistered marksto bevalid. See Coach HouseRest,Inc.v.
Coach & Six Rests.,Inc.,934 F.2d 1551,1562 (11th Cir.1991);Soweco,Inc.v.ShellOilCo.,
617 F.2d 1178,1184-85 (5th Cir.1980). Ifaregistered trademark isincontestable,itsvalidity,
ownership,and exclusive rightofuseare conclusive and irrebuttable,subjectonly to a limifed
numberofdefenses.See 15U.S.C.j1115(b);Soweco,617F.2d at1184-85.
In addition to the legalpresumption afforded to registered tradem arks,TracFone'sM arks
are also valid because they have acquired secondary meaning.4 Indeed, TracFone'sM arksare
wellknown and established to custom ersandthetrade assymbolsidentifying and distinguishing
TracFone's products and services, and signifying distinctive services of exceptional quality.
4 The Eleventh Circuithassetforth antunberoffactorsto be considered in determining whether
a mark hasacquired secondarym eaning,including:
(1)thelength andmannerofitsuse;(2)thenatureandextentofadvertisingand
promotion; (3) the efforts made by the plaintiff to promote a conscious
connection in thepublic'smind between the (mark)and theplaintiff'sproduct
orbusiness;and (4)theextenttowhich thepublicactually identifiesthe(markj
w ith the plaintiffsproductorventure.
Conagra,Inc.v.Singleton,743F.2d 1508,1513(11thCir.1984).
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ED.E.6at!33J AsaresultofthehighqualityofTracFone'sproducts,services,sales,promotion
and advertising,the M arkshavebecome an intrinsic and essentialpartofthe valuable goodwill
and property ofTracFone.1d.
B.
L ikelihood ofC onfusion
TheEleventh Circuitconsidersseven factorsto determinewhetherthereisalikelihood of
confusion:(1)type ofmark;(2)similarity ofmark;(3) similarity ofthe productsthe marks
represent;(4)similarity oftheparties'retailoutletsand customers;(5)similarity ofadvertising
mediaused;(6)defendant'sintent;and,(7)actualconfusion. SeeDieterv.# & H Indus.ofsw.
F1a., Inc., 880 F.2d 322, 326 (11th Cir. 1989). Each of these factors demonstrates that
Defendants'productsare likely tocauseconfusion.
TypeofM ark
Courts determ ine the levelofprotection to be afforded a mark based upon the mark's
strength:the strongerthem ark,thegreaterthe scopeofprotection. Frehling Enters.,Inc.v.Int1
SelectGroup,Inc.,192F.3d 1330,1335(11th Cir.1999).M arkscanbegroupedintooneoffotzr
categories: $ç(1)generic,(2)descriptive,(3)suggestive,and (4)arbitrary.''Id Thirdparty use
oftheMarksisanotherimportantfactorindeterminingamark'sstrength- ttltlhelessthatthird
partiesuse the m ark,the stronger itis,and the m ore protection itdeserves.'' Frehling Enters.,
Inc.,192 F.3d at1336. The finalfactorto considerin determining the strength ofamark is
whetheritis Slincontestable''- the strength ofthe mark is enhanced ifthe United States Patvnt
and Tradem ark Oftk ehasdeclared am ark ç'incontestable.''1d.
TracFone'sM arks- which arearbitrary m arks- are dueconsiderableprotection based on
theforegoing factors. An arbitrary m ark,such aslsun Bank'when applied to banking servicçs,
isone thatbearsno relationship to theproductand isthestrongesttypesofmark.1d.at1335-36.
Justasthe Sçsun Bank''mark is arbitrary asapplied to banking services,TracFone'sM arks àre
arbitrary as applied to prepaid phone service and are entitled to substantialprotection. Id at
1336. Second,only TracFone and itsaffiliatesuse the M arks. See Frehling Enters.,Inc.,192
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F.3d at1336 (ûndingthatno thirdpartiesusethe marksisanotherindication ofthe strength of
theM arks).Finally,theTracFonetrademarkisçlincontestable''and,therefore,entitledtoanother
layerofprotection.
SimilarityoftheMarks
In dettrmining tht sim ilarity ofthem arks,ççthe courtcom paresthe marksand considers
the overallim pressions thatthe m arks create,including the sound,appearance,and m annerin
which they areused.'' f#.at 1337. In thiscase,theM arkson the infringing Phonesareidentical
butthe infringing phones no longer conform to TracFone's specifications but stillcontain the
actualTracFone M ark on thehandset. Consum ersonly learn thatthe Phone no longeroperates
asdesignedupon attempting to usetheinfringing phoneforitsintended pum ose ofaccessingthe
E
TracFone prepaid wireless system . The Defendants'infringing schem e thus causes confusion
am ong consumers. See1nt'1Cosmetics Exch.,Inc.v.GapardisHealth drBeauty Inc.,303 F.3d
1242,1248(11thCir.2002).
J.Similarity oftheProductstheMarksRepresent
$é(T)hegreaterthesimilaritybetweentheproductsandservices,thegreaterthelikelihood
ofconfusion.'' E.Remy M artin drCo.,S.A.v.Shaw-Ross 1nt1 Imports,Inc.,756 F.2d 1525,
1530(11th Cir.1985).TheDefendants'infringingphonesappearvirtually identicaltounaltered
TracFone Phones.
4.SimilarityoftheParties'RetailOutletsandCustomers
tdfhisfactortakesinto consideration where,how,and to whom the parties'productsare
sold.'' Frehling Enters.,Inc.,192 F.3d at1339. Defendants'infringing phonesare sold throùgh
internet retail outlets and appear to the custom er as an authentic TracFone. Defendants are
targeting the snme constuners as TracFone individuals looking for affordable,high quality
wireless telephones. See Ambrit,Inc.v.Krajt,Inc.,812 F.2d 1531,1541 (11th Cir. 1986)
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(dûlllikelihood ofconfusion ismoreprobableiftheproductsaresold through thesame channels
tothesamepurchasers'').
Similarity ofAdvertising Media
This factor looks to each party's method of advertising. 1d. Although TracFone's
advertising ismuch more extensive than Defendants',Defendants also advertise on the internet.
See Exxon Corp.v.Texas Motor Exch.of Houston,Inc.,628 F.2d 500,505 (5th Cir.1980)
(findingthegreaterthe similarity betweentheadvertisingcampaigns,productsand services,the
greaterthelikelihoodofconfusion).
6.De# ndants'Intent
Thisfactorlooksto whetherdéadefendantadopted aplaintiffsm ark with theintention of
deriving a benefitfrom the plaintiff's businessreputation.'' Frehling Enters.,Inc.,192 F.3d at
1340. Likelihood of confusion can be dem onstrated as a matteroflaw ifthis factorispresent.
BabbitElectronics,lnc.v.Dynascan Corp.,38 F.3d 1161, 1179 (11th Cir.1994);Frehling
Enters., Inc., 192 F.3d at 1340. The infringing scheme here includes selling phones with
TracFone'sM arksintact,which dem onstratesthatthey seek to derive a benefitfrom TracFone's
businessreputation. M oreover,the Defendantsknowingly played a significantrole in the bulk
purchasing,unlocking,reflashing and reselling thePhoneswith theM arksintact.
7.ActualConfusion
çi-f'he 1aw is well settled in this circuit that evidence of actual confusion between
tradem arksisnotnecessary to a finding oflikelihood ofconfusion.'' E.Remy M artin,756 F.2d
at1529;Montgomery v.Noga,168 F.3d 1282,1302 (11th Cir.1999)((i(W je have held thata
plaintiffisnotrequired to provide evidence ofactualconfusion in orderto prove likelihood of
confusion.').Adoptinganidenticalmark tdwiththeintentofderivingbenefitfrom thereputation
of (Plaintiffs markq may alone be enough to justify the inference thatthere is confusing
similarity.'' AmBrit,812 F.2d at1542;seealso Int'lCosmetics Exch.,Inc.,303 F.3d at 1248-49
(holding thatconcurrentuse ofsamemmk on similarproductwassufficientto demonstratea
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likelihood ofconfusion);BabbitElectronics,Inc.,38 F.3d at 1179-80 (finding a likelihood of
confusion despitealackofevidenceofactualconfusion).
Based on the evidence presented,the parties sell virtually identical looking, directly
competingproductsto the snm epurchasersthrough the snm echannelsoftradeutilizingthe sam e
advertising vehicles. Therefore,there isa strong likelihood ofconfusion asto the source ofthe
products.
C.
R esale ofa G enuine Tradem arked Product
A nd the M aterialD ifferencc Exception
Defendants' products are also infringing because they are m aterially different than
TracFone's genuine Phones. The tirst sale doctrine does notapply when an alleged infringer
sells tradem arked goods that are materially differentthan those sold by the tradem ark owner.
SeeDavidoff.& CIE,S.A.v,f'
fD Int1Corp.,263F.3d 1297,1301(11thCir.2001);IberiaFoods
Corp.v.Romeo,150 F.3d 298,302-03 (3d Cir.1998);Enesco Corp.v.Price/costco Inc.,146
F.3d 1083,1087(9th Cir.1998)(quoting Warner-LambertCo.v.NorthsideDev.Corp.,86 F.3d
3,6(2d Cir.1996)(holding thatanon-conformingproductisnotgenuineand tditsdistribution
constitutestrademark infringemenf);Martin'
sHerendImports,Inc.v.Diamond & Gem Trading
USA,Co.,112 F.3d 1296, 1302 (5th Cir.1997);Societe Des Produits Nestle,S.A.v.Casa
Helvetia,Inc.,982 F.2d 633,644 (1st Cir. 1992); OriginalAppalachian Artworks,Inc.v.
GranadaElectronics,Inc.,816F.2d68,73(2dCir.1987). lndeed,materially differentproducts
thathave the sam e trademark m ay confuse consum ersand erode consum ergoodwilltoward the
mark.SeeIberia Foods,150 F.3d at303;Nestle,982 F.2d at638.
A m aterialdifference isone thatconsum ersconsiderrelevantto adecision aboutwhether
to purchase aproduct. SeeM artin'
s Herend Imports,112 F.3d at1302;Nestle,982 F.2d at641.
Because a m yriad of considerations m ay intluence consum er preferences, the threshold of
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materiality m ustbe kept low to include even subtle differences between products. See Iberia
Foods,150 F.3d at304;Nestle,982 F.2d at641. The resale ofa trademarked productthathas
been altered,resulting in physicaldiffertncesin theproduct,m ay constituteam aterialdifference
giving rise to a trademark infringementclaim. SeeNestle,982 F.2d at643-44 (applying the
m aterial difference exception,e.g.,differences in the composition,presentation and shape of
premium chocolates);OriginalAppalachian Artworks,816 F.2d at73 (applying the material
difference exception where the infringing Cabbage Patch Kids dolls had Spanish language
adoption papersandbirth certificates,ratherthan English);Sealy,Inc.v.Easy Living,Inc.,743
F.2d 1378,1384-85 (9th Cir.1984) (finding willfulinfringement where the defendantsold
genuine Sealy mattressestogetherwith non-sealy foundations);SingerMfg.Co.v.Briley,207
F.2d 519 (5th Cir.1953)(sale ofreconditioned trademarked goodswith no mention thatthe
productwasreconditioned constitutestrademark infringement);Joy Mfg.Co.v.CGM Valved:
GaugeCo.,Inc.,730F.Supp.1387(S.D.Tex.1989)(fndingintentionalinfringementwherethe
defendant used unauthorized nameplates bearing plaintiff's m ark on valves that defendant
refurbishedto looklikenew,butfailedtoindicatethem asused orreconditioned).
For example, reselling products with inferior warranties also constitutes a m aterial
difference. See Perkins Schoolfor the Blind v.Maxi-Aids,Inc.,274 F.Supp.2d 319,324
(E.D.N.Y.2003) (holding thatplaintiffasserted a valid trademark infringementclaim where
defendantsold genuinePerkinsBraillersproductswith an inferiorwarranty);M ovado Grp.,Inc.
v.Matagorda Ventures,Inc.,No.98Civ.6223LM M ,2000 W L 1855120,at*4 (S.D.N.Y.Dec.
19,2000)(findingthatthewarrantycanmaketheproductssufficiently significantlydifferentto
constituteinfringement). Severalcourtshaveheld thattheptzrchase and resaleofgoodssolely
within the United Statesm ay constitute infringem entwhen differences existin quality controlor
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the produdsthem selves. See Enesco,146 F.3d at1087;Warner-Lambert,86 F.3d at6)M atrix
Essentials,988 F.2d at590-91;ShellOilCo.v.CommercialPetroleum Inc.,928 F.2d 104,107
(4thCir.1991).
Defendantsknowingly playtd a signitk antrolein theresale ofTracFonePhonesthatare
materially different than those sold by TracFone. For instance, the w arranty infonnation is
removed,which invalidatesthe warranty in its entirety. (D.E.6 at! 771 Furthermore,the
TracFone packaging isrem oved and the handsetsare sold in packaging thatisnotapproved by
TracFone'squalitycontrols.Id at!64;TracFonev.AnaDisk,685 F.Supp.2d 1304 (S.D.Fla.
Feb.18,2010);see also Enesco,146 F.3d at 1087;Warner-Lambert,86 F.3d at 6;M atrix
Essentials,988 F.2d at590-91;ShellOilCo.v.CommercialPetroleum Inc.,928 F.2d 104,107
(4th Cir.1991)(differencesexistin quality controlorthe products themselvesmay resultin
infringement). Thus,underthematerialdifferenceexception,theDefendants'actionsconstitute
tradem ark infringem ent.5
II.
TracFone'sBreach ofContractClaim (CountThree)
'
To prevailon a cause of action for breach of contract,a party must show:(1)the
E
existence ofavalid and enforceable contract,(2)breach ofthe contract,and (3)damages.See
AIB Mortgage Co.v.Sweeney,687 So.2d 68,69 (F1a.3d DCA 1997).M oreover,Florida 1>w
provides thatt$(a) contractforsale ofgoodsmay be made in any mannersufficientto show
agreem ent,including conductby both partieswhich recognizestheexistence ofsuch a contraçt.''
Fla.Stat.j 672.20441)(adopting U.C.C.2-204). Thisstatute includesdtshrirlkwrap contracts''
(
like the one at issue, where an agreem ent becom es effective as soon as a custom er opens the
5Because TracFone haselected to collectonly statutory dam agesunderthe DM CA ,the Court
willnotdiscussthedam agesTracFonehassuffered asa resultofthisinfringem ent.
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product. TracFone Wireless,Inc.v.AccessTelecom,Inc.,642F.Supp.2d 1354,1364(S.
D.Fla.
2009).
In EtFlorida and the federalcircuits,shrinkwrap...agreements are valid and enforceable
contracts.'' Salco D istribs.,LLC v.icode,Inc.,N o.8:05-CV-642-T-27TGW ,2006 W L 449156,
at*2n.5(M .D.Fla.Feb.22,2006)(holdingpurchaserofsoftwareproductwasboundbyterms
ofsllrinkwrap agreementupon opening the packaging ofthe product,reasoning thata çtvendor,
asmasterofthe offer,m ay inviteacceptanceby conductand mayproposelimitationson the kind
ofconductthatconstitutes acceptance. A buyermay acceptby perf
orming theactsthevenèor
proposestotreatasacceptance.'')(quotingProCD,Inc.v.Zeidenberg,86F.3d 1447,1452 (7th
Cir.1996));seealso M icrosojtCorp.v.Big Boy Dist.LLC,589 F.Supp.2d 1308,1320 (S.D.
Fla.2008) (enforcing agreementagainsta downstream purchaser whose association with the
manufacturer included indirect contacts tllrough anotherparty);Siedle v.NationalAss'n of
Securities Dealers,lnc.248 F.Supp.2d 1140 (M .D.Fla.2002)(upholding the validity ofa
click-wrap agreement);Mgmt.Computer Controls,Inc.v.CharlesPerry Constn,Inc.,743 So.
2d 627 (F1a.1stDCA 1999)(discussingtheenforceabilityofaforum selection clausecontained
in a license agreement affixed to the outside of the software packaging where packaging
displayedastickerthatprovided (llbly openingthispacket,you indicateyouracceptanceofthe
(plaintiffsjlicenseagreement.').
The outside retail packaging of TracFone's Phones contains conspicuous language
restricting the use of the Phones for TracFone Prepaid W ireless service and prohibits the
consum er from tam pering or altering the software or hardware in the Phone, The language
providesin partCllbly purchasing oropening thispackage,you are agreeing to thesetermsand
thetermsand conditionsofserviceintheencloseduserguide.''(Complaint!40).Accordingly,
an enforceable contractexistsbetween thepartiesasto theDefendants'useofthePhonesand the
Defendants have breached the parties' contract by, inter alia, purchasing TracFone Prepaid
Phoneswith the specificintentto reflash orunlock thePhonesand ship thePhonesoutside ofthe
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UnitedStates.Id at!94.BecauseTracFonehaselectedtocollectonlystatutorydamagesunder
the DM CA,the Courtwillnotdiscussthe damages TracFone has suffered asa resultofihis
breach.
111.
TracFone'sCopvrizhtand DM CA Claim s(CountsFive.Six and Seven)
TracFone'sCopyrightClaim s
To establish copyrightinfringement,TracFone must prove: 1) ownership of a valid
copyright, and 2) copying of constituent elements of the work that are original. Feist
Publications,Inc.v.RuralTel.Serv.Co.,499U.S.340,361(1991);Bateman v,Mnemonic,Inc.,
79 F.3d 1532,1540 (11th Cir.1996). In the contextofcomputersoftware,asisthecase for
TracFone,when the defendanthasengaged in literalorverbatim copying ofa11ofthe protected
source code,there issufficientevidenceto authorizea finding ofinfringement.SeeBateman,79
F.3d at 1544 n.25;see also M ontgomery v,Noga, 168 F.3d 1282, 1292 (11th Cir. 1999)
(upholding copyrightclaim based on copying over seventy percent ofthe source code from
originalversioninwhichtheclaimantownedaregistered copyright).
TracFone owns United States Copyright Registration No. TX 0006515894 for its
computerprogram forcellularhandset-residentprepaidsystem. (D.E.6at!40q Plzrsuanttothe
copyrightapplication,the software wascreated in 2002 and firstused in com m erceon January 1,
2003. Id atExhibitC. Theapplication forregistration was filed with the Library ofCongress
on September 15, 2006. f#. A certificate of copyright registrations creates a rebuttable
presumption thatthecopyrightisvalid.SeeMontgomery,168F.3dat1292;17U.S.C.j410(c)
(çtthe certificateofa registration made before orwithin fiveyearsafterfirstpublication ofthe
work shallconstituteprimafacieevidenceofthevalidityofthecopyrightandofthefactsstated
inthecertificate.'').Thus,TracFonehasavalidcopyrightregistration.
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Defendantsand/ortheirco-conspirators'actionsin retlashing orotherwise m odifying the
federally copyrighted TracFone Prepaid Software, without TracFone's authority or consent,
createsanunauthorizedreproduction andderivateworkoftheTracFonePrepaidSoftware.(D.E.
6 at!! 101-1021 Therefore,TracFone'scopyrighthasbeen infringed. BecauseTracFone has
elected to collect only statutory dnm ages tmder the DM CA, the Courtwill not discuss the
dnm agesTracFonehassufferedasa resultofthisinfringement.
B.
D M C A V iolations
17U.S.C.j1201(a)(1)statesthat:
N o person shall circllm vent a technological m easure6 that effectively controls
accessto a w ork7protected underthistitle.
17U.S.C.j1201(a)(2)statesthat:
No person shallm anufacture,import,offer to the public,provide,or otherwise
traffic in any teclmology,product,service,device,com ponent,orpartthereof,
that-
(A)isprimarily designed orproduced forthepumoseofcircumventing a
teclmologicalmeasurethateffectively controls accessto awork protected
underthistitle;
(B)hasonlylimited commercially signitkantpurposeoruseotherthanto
circum venta teclmologicalmeasure that effectively controls access to a
work protected underthistitle;or,
(C) is marketed by thatperson or another acting in concertwith that
person with that person's knowledge for use in circum venting a
technologicalmeasurethateffectively controlsaccessto a work protected
underthistitle.
6 (t(Tjoçcircumventatechnologicalmeasure'meanstodescrambleascrambledwork,todecrypt
an encrypted work, or otherwise to avoid, bypass, remove, deactivate, or impair a
technological meastlre, without the authority of the copyright owner.'' 17 U.S.C. j
1201(a)(3)(A).
61(Aqtechnologicalmeasure Seffectively controls access to a work'ifthe measure,in the
ordinary course ofits operation,requires the application ofinformation,or a process or a
treatm ent,w ith the authority of the copyright owner,to gain access to the w ork.'' 17 U .S.C.
j1201(a)(3)(B).
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The TracFone Prepaid Software contains technological measures that in the ordinary
course of the measures' operation require the application of inform ation, or a process or a
treatment,with TracFone'sauthority,to gain accessto theproprietary software. (D.E.6 at!
109) TracFonedid notgiveDefendantsortheirco-conspiratorsauthority to reflash,unlock,or
otherwiseto avoid,bypass,rem ove,disable,deactivate,orimpairthe technologicalm easuresfor
effectivelycontrolling accessto and operationoftheTracFonePrepaid Software. 1d at!! 111M oreover,the Defendants aded,and/or knowingly engaged in a conspiracy,to avoid,
bypass,remove,disable,deactivate,orimpairTracFone'stechnologicalmeasure foreffectively
controlling access to the proprietary software without TracFone's authority. Id at! 113.
Defendantsengaged in this conductforthe purpose ofreselling the altered devicesfora profit,
and not for the sole purpose of lawfully connecting to a wireless telephone com munication
network.1d.at! 114.
Further, Defendants and/or their co-conspirators are in possession of certain
instrumentalities that avoid, bypass, rem ove, disable, deactivate, or otherwise im pair the
teclmologicalmeasures within the TracFone Prepaid Software thateffectively controlaccessto
the proprietary TracFone Prepaid Software. 1d. at ! 118. Accordingly, Defendants are
knowingly facilitating co-conspirators who are, trafficking in the service of circumventing
TracFone's technological m easures that effectively control access to TracFone's Prepaid
Software by offering to thepublic itsalteration service fora fee. Id at! 119. Based on the
foregoing,the D efendants have violated the DM CA and TracFone is entitled to recover statutory
dam agesforDefendants'violation.
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Pursuantto 17U.S.C.j 1203(c)(3)(A),TracFoneisentitledto recoverstatutorydnmayes
d'of not less than $200 or m ore than $2,5005' for each TracFone Prepaid Phone that the
Defendants altered,or sold as pat'tofa conspiracy to alter,in furtherance ofthe Bulk Resale
Scheme. SeeStockwireResearch Group,Inc.v.febed,577F.Supp.2d 1262,1268 (S.D.Fla.
2008) (awarding statutory damages per act of circumvention in the total amount of
$2,357,200.00))see also M icrosojtCorp.v.SilverStar Micro,Inc.,No.1:06-cv-1350-W SD,
2008W L 115006,at#9 (N.D.Ga.Jan.9,2008)(awarding thestatutory maximum foreach of
defendant'sactsof circumvention);Sony ComputerEntm 'tAm.,Inc.v.Divineo,Inc.,457 F.
Supp.2d957,967-68(N.D.Cal.2006)(awardingstatutorydnmagesin amountof$5,791,400.00
tmdertheDM CA in adefaultjudgmentagainstdefendant);Sony ComputerEntm '
tAm.,Inc.v.
Filipiak, 406 F.Supp. 2d 1068, 1074 (N.D. Cal.2005) (entering finaljudgment against
.
E
defendantfor$6,018,700.00 in statutory dam agesunderthe DM CA based on defendant'ssaleof
7194 infringingitemsl;Coxcom,Inc.v.Chaffee,No.CA05-107S,2007W L 1577708,at*7 (D.
R.I.M ay 31,2007) (Gdcourtshave interpreted this provision (17 U.S.C.j 1203(c)(3)(A))to
authorize an award ofstatutory damages lfor each device .
&//#''')(emphasisadded)(quoting
Fillpiak,406F.Supp.2dat1074).
Businessrecordsproduced by TracFonedemonstratethatDefendantPA Chinaaltered or
sold atm inim um 1,000 TracFone Prepaid Phonesin furtherance ofthe Bulk Resale Scheme. See
(D.E.61 ThesebusinessrecordsdemonstratethatDefendantNew PA Chinaaltered orsold as
partofa conspiracy to alteratm inimtlm 15,083 TracFone Prepaid Phonesin furtherance ofthe
Bulk Resale Schem e in violation ofthe D M CA . Id. The sale ofthese Phones by the D efendants
have caused damage and substantialand irreparable harm to TracFone. Id at!! 124, 126.
Furtherm ore, Defendant's actions were willful and necessitate an award at the maximum
statutory amount.SeeFill
piak,406F.Supp.2dat1075 (awardingthemaximum statutoryaward
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percirctmwention based,inpart,on defendant'swillfulviolationsoftheDM CA).Accordingly,
TracFoneisawarded statutory dnm agesagainstDefendantNew Pak Chinathem axim um am ount
of$2,500,000.00. 17 U.S.C.j 1203(c)(3)(A);see also Divineo,lnc.,457 F.Supp.2d 957;
Fili
piak,406 F.Supp.2d 1068;Chaffee,2007 W L 1577708,at*7. Additionally,TracFone is
awarded statutory dnm ages against Defendant PA
China the m axim um nmount of
$37,707,500.00.Id.
IV.
TracFonv'sTortiousInterferenceClaim (CountNine)
Toprevailon aclaim oftortiousinterference,TracFonemustshow:$141)theexistenceof
abusinessrelationship oran enforceable contract,(2)knowledgeoftherelationship on thepart
ofdefendant,(3)an intentionaland unjustifed interferencewith the relationship by defendant,
and (4)damageto theplaintiffasaresultofthe breach oftherelationship.'' Carlv.Republic
Security Bank,282 F.Supp.2d 1358,1371-72 (S.D.Fla.2003);seealso TamiamiTrailTours,
Inc.v.Cotton,463 So.2d 1126,1127 (Fla.1985)(elements oftortious interference with a
businessrelationship);WackenhutCorp.v.Maimone,389 So.2d656,657 (F1a.4th DCA 1980)
(elementsoftortiousinterferencewithacontractualrelationship).
TracFonehasproperlyestablished theexistenceofan enforceablecontract. ED.E.6 at!!
94-95,127-1331 Defendantsknew aboutthecontractualrelationship and,despiteitsknowledge,
itintentionallyand unjustifiably interfered withtherelationship.1d.at!! 127-133.Defendants'
actions caused TracFone to sufferdamages. f#.at! 131. Because TracFone haselected to
collect only statutory damages under the DM CA, the Court will not discuss the danlages
TracFone has suffered asa resultofthistortiousinterference.
V.
TracFone'sConspiracv Claim s(CountsEizht.Nine and Ten)
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To properly statea claim forcivilconspiracy,a plaintiffmustallege d1(a)a conspiracy
between two ormoreparties,(b)to doan urllawfulactorto doalawfulactby unlawfulmeans,
(c)thedoingofsome overtactin pursuanctoftheconspiracy,and(d)damageto plaintiffasa
result ofthe acts done underthe conspiracy.'' Fla.Fern Growers Assoc.,Inc. v. Concerhed
Citizensofputnam C/y.,616 So.2d562,565(Fla.5thDCA 1993).
Theevidence showsthatDefendantsworked in concertwith otherindividualswho wère
engaged in the unlawfulbulk puxchasing,reflashing,and sale ofthe altered TracFone Phones.
(D.E.6 at! 1381. Furthermore,asaresultoftheconspiracy,TracFonehassuffereddamagesin
theform oflostsales,lostprofits,lossofability to controlthe quality ofitsproduct,inability to
supply retailerswith sufscientvolum e ofPhones,and lossofbusinessreputation and goodwill.
(D.E.6 at!! 71,126, 131,1361. Accordingly,Defendants have actively participated in a
conspiracy to induce breach ofcontractand a conspiracy in violation of Florida comm on law.
Fla.Fern GrowersAssoc., 616 So.2d at 565. Because TracFone has elected to collect only
statutory dam ages underthe DM CA,the Courtwillnot discuss the dam ages TracFone has
sufferedasa resultofthisunlawfulconspiracy.
VI.
TracFone'sUniustEnrichm entClaim (CountEleven)
To prevailon a causeofaction forunjustenrichment,a plaintiffmustshow that:
benefh wasconferred on defendant,2)defendanthad knowledge ofthe benefitconferred,3)
defendantacceptedandretainedthebenefit,and4)itwouldbeinequitablefordefendanttoretain
the benefitwithoutcom pensation to the plaintiff. N G.L.TravelAssocs.v. Celebrity Cruises,
Inc.,764So.2d672,675(F1a.3dDCA 2000);seealsoNovaInformationSys.,Inc.v.Greenwich
Ins.Co.,365 F.3d 996,1006-07 (11th Cir.2004). Courtshave held thata claim forunjust
enricllm ent,a form ofequitable relief,cannotstand ifan expresscontractexists. M orris v.ADT
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Sec.Services,580F.Supp.2d 1305,1312-13 (S.D.Fla.2008)(claim forunjustemichmentmay
proceed whereplaintiffhas notasserted a claim based on an expresscontract). Because this
Courthaspreviously found Defendants liable for breach ofcontract, this claim only appliesto
thePhonesDefendantspurchased and sold thatarenotsubjectto thel:sllrirlkwrap''agreements
thatform thebasisofTracFone'sbreach ofcontractclaim .
By bulk plzrchasing the TracFone Prepaid Phones from bulk resellers below the
m anufacturers'costof the Phones,the Defendants obtained benefhs from TracFone that have
resulted in signitk ant financial bentfits to the Defendants through its resale of the bulk
purchased Tracfone Prepaid Phones. (D.E.6 at! 141) Defendants acquired the benefits
voluntarily andwith fullknowledge. f#.at! 142.Defendantshaveretained thebenefitsunder
such circumstances thatmake itunjustand inequitable for Defendants to retain the benefits
withoutpayingTracFonethevalueofthebenetitsDefendants'acquired.f#.at! 143.Therefore,
theDefendantshave been unjustly enriched by theiractions. Because TracFonehaselected to
collect only statutory dam ages under the DM CA ,the Court will not discuss the dam ages
TracFonehassufferedasaresultofthisunjustenrichment.
C O N CLU SIO N
Accordingly,itishereby,
O RDERED andADJUDGED that:
1.
Finaljudgmentishereby enteredagainstDefendant,PakChinaGroupCo.,Ltd.,a
foreign corporation, and Defendant N ew Pak China Trade lnternational Co., a foreign
corporation,in favor of the Plaintiff,TracFone W ireless,Inc.,on all of the claim s setforth in
TracFone's Com plaint.
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Pursuantto 17 U.S.C.j 1203(c)(3)(A),TracFoneisentitled torecoverstatutory
dnm ages dtof not less than $200 or more than $2,500'' for each TracFone Prepaid Phone
Defendant Pak China Group Co.,Ltd.altered,or sold as partof a conspiracy to alter, in
furtherance ofthe Bulk Resale Scheme. The Courttlnds thatDefendantPG China Group Co.,
Ltd.altered,orsold aspartofaconspiracy to alter,atm inim um ,1,000 TracFonePrepaid Phones
in furtherance ofthe Bulk Resale Schem e in violation ofthe DM CA. FinalJudgm entishereby
entered againstDefendant,PA China Group Co.,Ltd.,jointly and severally,in favorofthe
Plaintiff,in theprincipalamountof$2,500,000.00 which shallbearinterestatthelegalrate,and
forwhich letexecution issueforthwith.
3.
Pursuantto 17 U.S.C.j 1203(c)(3)(A),TracFoneisentitled to recoverstatutory
damages (Eof not less than $200 or m ore than $2,500'' for each TracFone Prepaid Phone
DefendantN ew Pak China Trade InternationalCo.altered,or sold as partof a conspiracy to
alter,in furtheranceofthe Bulk Resale Scheme. The CourtfindsthatDefendantNew Pak China
Trade Intem ational Co. altered,or sold as part of a conspiracy to alter, at m inim um , 15,083
TracFone Prepaid Phonesin furtherance ofthe Bulk Resale Schem e in violation ofthe DM CA.
FinalJudgment is hereby entered againstDefendant,N ew Pak China Trade lnternationalCo.,
jointly andseverally,in favorofthePlaintiff,in theprincipalamountof$37,707,500.00 which
shallbearinterestatthelegalrate,and forwhich letexecution issueforthwith.
4.
Defendant PA China Group Co., Ltd. and Defendant N ew PA China Trade
lnternationalCo.are hereby PERM ANEN TLY ENJOW ED from :
a.
purchasing and/orselling any wirelessm obile handsetthatthey know,or
should know ,bears,or at one tim e bore,any TracFone,N ET IO,Straight
Talk, or Safelwink tradem ark, any other tradem ark owned or used by
TracFone,or any other m odelof w ireless m obile phone sold or m arketed
21792657.1
25
Case 1:10-cv-24386-JEM Document 80 Entered on FLSD Docket 02/06/2012 Page 26 of 28
by TracFone (Gt-rracFone Handsets''). Defendants are enjoined from
purchasing and/orselling a1lm odelsofwireless phones currently offered
forsaleby TracFone,orthatm ay be offered forsalein thefuture, aslisted
and updated from time to tim e on TracFone's,NET10's,StraightTalk's,
and
SafeLink's
websites, wwm tracfone.com , www.netlo.com ,
w ww.straichttalk.com and www.safelink.com ,respectively,and including
withoutlim itation thefollowingTracFone Handsets:
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M otorolaV60
M otorolaV 170
M otorolaV 171
M otorola C 155
M otorola C343
Nokia 3390
Nokia 1100
N okia 2600
Nokia2126
N okia 1112
N okia21261
N okia 5125
N okia5165
LG 3280
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LG 410G
LG 100C
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.
LG 220C (Pink)
M otorolaC139
Nokia6790
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M otorolaC261
M otorola V 176
N okiaE71
N okia E5
LG 620G
M otorolaC139 Pinkl
Nokia1600
LG 1500
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LG 300G
LG 320G
LG 200CM
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LG 800G
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M otorolaW 370
M otorolaW 175G
M otorolaW 260G
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M otorola W 375
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21792657.l
26
Snm sun
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Case 1:10-cv-24386-JEM Document 80 Entered on FLSD Docket 02/06/2012 Page 27 of 28
rekitting,reflashing and/orunlockingofany TracFoneHandset;
accessing, altering, erasing, tampering with, deleting or otherwise
disabling TraeFone's proprietary prepaid cellular software contained
within any m odelofTracFoneHandsets;
d.
facilitating or in any way assisting other persons or entities who a
Defendants knows or should know are engaged in rekitting,retlashing
and/or unlocking TracFone Handsets and/or hacking, altering,erasing,
tampering with,deleting or otherwise disabling the software installed in
TracFone H andsets;
e.
facilitating or in any way assisting other persons or entities who a
Defendantknowsorshould know are engaged in any oftheactsprohibited
underthisPermanentInjunction including,withoutlimitation,thebuying
and/orselling ofunlocked TracFoneHandsets;and,
knowingly usingthe TracFonem E-flo/straightTalk/safetaink Tradem arks
or any othertradem ark owned or used by TracFone,or thatis likely to
cause
confusion
with
TracFonem ETlo/straight
Talk/safelwink
Tradem arks,w ithoutTracFone'spriorw ritten authorization.
4.
The Courtretainsjurisdiction overthis matter and the parties to this action in
ordertoenforceanyviolationofthetermsofthisPermanentInjunction ortheparties'settlement.
5.
lfa Defendantto this action violates the terms ofthisPermanent Injunction,
TracFone shall be entitled to file an A ffidavit or D eclaration of Violation requesting that the
Courtorderthepaym entofcompensatory damagesto TracFone in the am ountofFiveThousand
DollarsandNo Cents($5,000.00 (U.S.))foreach Phone purchased,sold,unlocked,reflashed,
21792657.1
Case 1:10-cv-24386-JEM Document 80 Entered on FLSD Docket 02/06/2012 Page 28 of 28
altered,rekitted,advertised,solicitedand/orshippedinviolationofthePermanentInjunction,or
asingledamagesawardofOneM illion DollarsandNoCents($1,000,000.00 (U.S.)),whichever
isgreater. TracFone shallprovide atleastfive (5)working daysnotice to Defendantts)after
filing an AffidavitorDeclaration ofViolation. The Courtfindsthatany am ountsawarded under
this paragraph are compensatory and reasonable estimationsofthe m inimum dam agessuffered
by TracFone forsuch abreach and willserveto compensate TracFoneforitslossesin the eventa
DefendantviolatesthetermsofthisPermanentlnjunction.
The prevailing party in any proceeding to enforce com pliance with the term s of
thisPermanentInjunction shallbeentitledtoanawardofitsattorneys'feesandcosts.
The lastknown addressofDefendantPak China is5/F,OrientalCrystalFinance
Centre,107-109 Chatham Road,T.S.T,.Kowloon,Hong Kong
8.
The lastknow'
n address ofDefendantNew Pak China is 0/8 Sunny Trade Int'l
Ltd.,Shop 58 G/F,Chung King M ansion,36-44 Nathan Road,Tsim Sha Tsui,Kowloon,Hong
K01V '
9.
The addressofPlaintiffTracFone W ireless, Inc.is 9700 N orthw est 112ti
lAvenue,
M inm i,Florida 33178.
Plaintiff i: to serve a copv of the Final Judem ent on Defendants Pak C hina
G roup Co.L td.and N ew Pak China Trade International,C o.w ithin 20 davs of the date of
thisFinalJudam ent.
N
DO N E A ND O R D ER ED in
to
,thisY da ofFeb ary,2012
.
JO S E.M ARTIN E
UN ED STATES ISTRICT JU D GE
Copiesprovidedto:
M agistrate Judge M cAliley
A11CounselofRecord
21792657.1
28